List five ways that the creators of the U.S. Federal Reserve System set up the system to be independent from the federal government
What will be an ideal response?
1. The Federal Reserve Act of 1913 divided the country into 12 regions, each with a Federal Reserve bank that was originally charged with implementing policy in that region.
2. Federal Reserve governors are appointed by the president to 14-year terms, and they cannot be fired, which frees them to conduct policy without fear of reprisal.
3. Federal Reserve governors cannot be reappointed, which eliminates the incentive for governors to curry favor with politicians for reappointment.
4. The Federal Reserve is not a part of or under legal control of any branch of the government.
5. The Federal Reserve funds its operations from the interest it earns on its bond holdings, and does not depend on government funding.
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The government sector balance is equal to net taxes ________ government expenditure on goods and services
If that number is ________, a government sector surplus is lent to other sectors; if that number is ________, borrowing from other sectors must finance a government deficit. A) plus; positive; negative B) minus; negative; positive C) minus; negative; negative D) minus; positive; positive E) minus; positive; negative
A class-action lawsuit is a civil action brought in a court of law designed to make it feasible for people who have suffered damages to come together to sue for recovery
Indicate whether the statement is true or false
The ________, the difference between the interest rate on Baa corporate bonds and U.S. Treasury bonds. rose sharply during the Great Depression
A) credit boom B) credit spread C) adjustable-rate D) default swap
Consider a market that is in equilibrium. If it experiences both a decrease in demand and an increase in supply, what can be said of the new equilibrium? The equilibrium:
A. price will definitely fall, while the equilibrium quantity cannot be predicted. B. price and quantity will both fall. C. quantity will definitely fall, while the equilibrium price cannot be predicted. D. price and quantity will both rise.